PESTEL Analysis of FMCG Sector

• Political fector
• Political stability : Political stability is one of the important most factor which influence thegrowth of business directly.
If Political stability is higher, then it leads to perfection inbusiness & on the other hand if there is unstability the
business will have to suffer.
• Taxation policy : Tax policy of government will affect the price of inputs & it ultimately affectthe prices of final
products & it will directly affect the sale of product.
• Government intervenes : This indicates that at what level the government intervences in theeconomy. If the government
intervence is more sometimes it helps the organization at largeextent
• Subsidies : The subsidies which are provided by government to different organisation atdifferent level also help it to grow at
faster rate & helps the organisation in reducing thefinance which is to be funded from outside & it directly
reduces interest amount paid infavour of fund raised from outside.
• Trading policies : This indicates the policies related to import & export of goods and servicesfrom different nations.
If the policies are favourable more goods & services will be imported& exported, & on the other hand if
policies are unfavourable it will restricts the import &export.
• Labour law : Labour law also affect the organisation, for example- child labour, a child below14 year of age can not work
In factory or any hazardious place.
• ECONOMIC FACTORS :

• Interest rates : Interest rate directly affect the cost of capital, if the interest rate is higher the cost of capital will increase
& if it is lower then cost of capital will be lower. This directly affect the profit of the organization & it’s growth.

• Tax charges : If the tax charged by the government is lower then it will reduce the product price & if it is higher then it
will increase the prices of the products.
 
• Exchange rates : This shows that what is the exchange rate or foreign currency rate. If exchange rate is higher more amount
is paid on import of goods & if it lowers less amount is to be paid & on the other hand if it is higher the amount
received will be more & if it is lower the amount received will be low.

• Inflation rate : Inflation means the rise in the value of all the product in the economy, if inflation rate is higher the cost of
products will be higher & if inflation rate is lower the cost of product will be lower. This directly affect the growth
of the organization.
• SOCIO CULTURAL FACTORS
• Demographics : Demographics is the study of human population in the economy. It helps the organization to
divide the markets in different segments to target a large of customers. For Example- according to race, age,
gender, family, religion, & sex.
• Distribution of income : This shows that how income is distributed in the economy. It directly affect the
purchasing power of the buyers. And ultimately leads to increase or decrease in the consumption level of
the products.
• Changes in life style : Change in life style also leads to increase or decrease in the demand for different
• commodities. For example-presently LCD & LED TV’s have replaced Digital displayed TV set, this
shows that the changes in life style of consumers.
• Consumerism : This indicates that a large number of options are available while purchasing of goods to
consumers, so the choice becomes easy & quality products can be choose by consumers. So while
purchasing a consumer have different choices to select product according to his needs.
• TECHNOLOGICAL FACTORS
 
•  Advancement in technology : New technology helps in economising the scale of production, this means that
new technology helps in increasing the level of production, & reducing the costs of inputs, & max
imising the level of profits.
• ENVIRONMENTAL FACTORS 

• Ecological : The ecological and environment aspects such as weather, climate, & climate changes, which
may especially affect industry such as tourism, farming, & insurance. In FMCG Air conditioner’s
demand increase in summer season.

• Environmental issues : Global warming is one of the major issue now-a-days as external factor is becoming
a significant issue for firms to consider. Many remedies have been take into reduce Global warming.
• Legal fector
•  Employment law : Employment law provides equal opportunities to every citizen to work & earn his
livelihood. It provides equal opportunities to every citizen.